Stocks Turning In A Mixed Performance In Mid-Afternoon Trading - U.S. Commentary

By IBT Staff Reporter On 07/28/09 AT 2:39 PM

RTTNews - Stocks have staged a modest recovery and are turning in a mixed performance in mid-afternoon trading on Tuesday. The major averages are on opposite sides of the unchanged mark, with the tech-heavy Nasdaq posting a modest gain.

Consumer confidence deteriorated by more than expected in the month of July, according to a report released by the Conference Board this morning. The decrease reflected less favorable assessments of both current conditions and the near-term outlook.

Earlier, Standard and Poor's released a report showing that U.S. home prices continued to decline at a significant annual rate in the month of May, although the pace of decline in prices slowed for the fourth consecutive month.

In earnings news, Valero Energy (VLO), Amgen (AMGN) and Manitowoc (MTW) reported earnings that beat analyst estimates. On the other hand, Office Depot (ODP) fell well short of analyst forecasts.

Meanwhile, IBM Corp. (IBM) announced that it has entered into a definitive agreement to acquire SPSS Inc. (SPSS). The all-cash transaction has a price of $50 per share, resulting in a total cash consideration of approximately $1.2 billion.

In recent trading, the Dow briefly joined the Nasdaq in positive territory, but it has slipped back into the red since then. While the Nasdaq is currently up 9.67 at 1,977.56, the Dow is down 2.57 at 9,105.94 and the S&P 500 is down 1.09 at 981.09.

Dow Components

The majority of the Dow components are in negative territory, contributing to the modest loss being shown by the blue chip index.

The Dow is being hurt by shares of Pfizer (PFE), which are currently down by 3 percent. The day's retreat has pulled the stock off of its best closing price in six months.

Merck (MRK) and American Express (AXP) are also moving to the downside, falling by 2.9 percent and 2.5 percent, respectively. Both of the stocks are continuing to back off of multi-month closing highs set on Friday.

While shares of Exxon Mobil (XOM) and DuPont (DD) are also pulling back off recent highs, Boeing (BA) is leading the way higher in the blue chip index, posting a gain of 2.5 percent. Despite the strong upward move, the stock remains stuck in a recent trading range.

Bank of America (BAC) and General Electric (GE) are also rising, although by more modest margins. The stocks are also lingering within their recent trading ranges.

Sector News

Weakness remains visible among resource stocks, with gold, oil service, steel and natural gas stocks continuing to see some of the day's worst performances. The weakness among resource stocks comes amid a pullback in commodity prices on the NYMEX.

Utility stocks are also posting steep losses, as reflected by the 2.4 percent decline being shown by the Dow Jones Utilities Average. FPL Group (FPL) is leading eh sector lower, falling 5.6 percent after reaching a ten-month closing high last week. The loss comes after FPL reported second quarter revenue below analyst estimates.

While networking, brokerage, trucking and chemical stocks are also posting notable losses, health insurance and healthcare provider stocks continue to see considerable strength.

Strength has also emerged among electronic storage, housing and airline stocks. The NYSE Arca Disk Drive Index is up by 2.1 percent, while the Philadelphia Housing Sector is advancing by 1.6 percent on the heels of the day's encouraging housing price data.

In Focus: Economic News, Earnings Data

As mentioned above, the Conference Board said that its consumer confidence index fell to 46.6 in July from an unrevised 49.3 in June. Economists had been expecting a much more modest decline by the index to a reading of about 49.0.

Lynn Franco, Director of the Conference Board Consumer Research Center said, Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months.

Separately, Standard and Poor's said that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 17.1 percent in May compared to the 18.1 percent decrease reported for April. Economists had expected the report to show that prices fell 17.9 percent year-over-year.

Also this morning, traders looked to earnings from entertainment giant Viacom (VIA), which reported adjusted second quarter earnings of $0.49 per share, compared to $0.64 in the previous year. While earnings came in-line with Wall Street analysts, revenues came in at $3.3 billion, well short of expectations of $3.5 billion.

Meanwhile, the major European markets closed firmly on the downside, with the German DAX Index and the French CAC 40 Index finishing down by 1.5 percent and 1.2 percent, respectively, while the U.K.'s FTSE 100 Index slipped by 1.3 percent.

In the bond markets, treasuries are seeing volatility, ceding some of their earlier gains following the day's auction of two-year notes. Subsequently, the yield on the benchmark ten-year note is trading at 3.697 percent, falling by 1.6 basis points on the day.